Is Henderson Land Development Company Limited (HKG:12) Potentially Undervalued?

Let's talk about the popular Henderson Land Development Company Limited (HKG:12). The company's shares maintained its current share price over the past couple of month on the SEHK, with a relatively tight range of HK$31.80 to HK$34.15. However, does this price actually reflect the true value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Henderson Land Development’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Henderson Land Development

What is Henderson Land Development worth?

The stock is currently trading at HK$33.45 on the share market, which means it is overvalued by 26% compared to my intrinsic value of HK$26.60. This means that the opportunity to buy Henderson Land Development at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that Henderson Land Development’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Henderson Land Development?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 2.3% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Henderson Land Development, at least in the short term.

What this means for you:

Are you a shareholder? 12’s future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 12 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 12 for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Henderson Land Development, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.